What Obama’s Thinking

I was stunned when I read this. First some caveats:

The source is an article that summarizes a sit-down he had with House Speaker John Boehner by Stephen Moore in January 7 edition of The Wall Street Journal. Boehner is a fairly conservative Republican, and Moore is a libertarian. So … this isn’t going to be pro-Obama.

What stunned House Speaker John Boehner more than anything else during his prolonged closed-door budget negotiations with Barack Obama was this revelation: "At one point several weeks ago," Mr. Boehner says, "the president said to me, 'We don't have a spending problem.' "

…

The president's insistence that Washington doesn't have a spending problem, Mr. Boehner says, is predicated on the belief that massive federal deficits stem from what Mr. Obama called "a health-care problem." Mr. Boehner says that after he recovered from his astonishment—"They blame all of the fiscal woes on our health-care system"—he replied: "Clearly we have a health-care problem, which is about to get worse with ObamaCare. But, Mr. President, we have a very serious spending problem." He repeated this message so often, he says, that toward the end of the negotiations, the president became irritated and said: "I'm getting tired of hearing you say that." [emphasis added]

If you’re like me, and you have trouble understanding where the Democrats in D.C. are coming from, this is the clue you need.

Think about the implications of this: 1) we’re in this situation because of healthcare costs, and 2) presumably because the Democrats passed the Obamacare bill they wanted we’re all going to live happily ever after.

OMFG: this is benighted (that’s a good word for a college student to learn, here’s the definition).

This position denies that:

We’ve had a passive increase in the deficit and debt because of the Great Recession of 2007-9, but we’re still not really moving in the right direction with this.

We’ve had a structural increase in the deficit and current and future debts because of responses to the Great Recession in the “Obama” and Bush stimulus packages.

That concerns about the size and scope of Federal spending have not been a major issue for over 30 years now.

That social security isn’t a big problem as well.

While there were certainly some problems with access to healthcare prior to Obamacare, no one should deny that the fundamental problem was with Medicare: how was the government going to sustain providing open-ended medical care to seniors. Everything else was just details.

And the problems with Medicare really boil down to three things:

Healthcare works.

Healthcare is a luxury good.

We lack political will to adjust the age at which Medicare coverage starts.

Think about these:

If healthcare didn’t work, no one would want it, and we wouldn’t spend so much on it … and the problem would go away.

The income elasticity of healthcare is well over +1: as people become richer they’ll buy proportionally more of it. Spending on healthcare isn’t a cause of problems; instead it’s a side effect of a society that’s doing well economically. Go ahead: name all the poor countries where healthcare spending is high on the policy priority list.

If people are living longer, this changes the proportion of Medicare payers to receivers. The only way to make this work is to hit the payers up for more cash, or to raise the age at which you can begin to receive benefits. Right or wrong, democracies consistently choose the former.

In what way did Obamacare (which is essentially the Republican healthcare position of the 90’s, as passed by Republican Mitt Romney in Massachusetts a decade later) address any of these? Is it even reasonable to think that it could or should have?

Let me give you a metaphor for all this. Society and the economy is a football team playing defense. They are lined up in their stances, snorting and ready to go. The Democrats are on offense, and Obama is the quarterback. Except the Democrats just walked on to the field in his pinstripes and baseball caps. Some of them think they won’t get hurt because the referees are on their side. Obama’s got a baseball in his hand and is looking for the pitcher’s mound. The Republicans have gone home because they don’t want to play basketball. And the media is wringing its hands because it would prefer that politics was a more cooperative sport … like rowing.

Comments

Well... it's, ah, un-nuanced. But I don't think I'd read all that much into Obama's remarks. I think he's met Boehner a couple of times by now, and he's made some remarks to Boehner and Boehner's made some remarks back, and they know by now what arguments they're going to raise. So this is pretty much the equivalent of getting in an argument with your wife for the fifth time about her useless brother Donald and having her shrug you off with "Whatever, Dave." So there's familiarity without a lot of love showing and it's not clear outsiders who haven't watched the marriage for a few years can understand what's going on without a scorecard.

Yeah, arguably Obama and Boehner ought to be on more respectful terms with each other, but in a saner universe Obama and Boehner wouldn't be dickering over the budget deficit every other week. Is Obama actually the person who deserves all the blame?

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And personally, it seems a damned silly argument. Boehner ought to be free to pop up once a day and scream "We must reduce the deficit immediately!" on all the major networks and websites. And Obama ought to be free to pop up just as often and say "To reduce the deficit, I've just ordered the Secretary of Defense to close a naval base in Turkey, an Air Force base in Italy, and two small Army bases in Kentucky! We'll get back to you on Monday with more closures!" Somehow, after a couple of weeks of that... well, the deficit would be smaller, and Democrats would be pleased and Republicans would be ... They'd be something, anyhow, I'm not sure what.

(1) Healthcare is a potential counter to the problems of low birth rates. If just about everyone was hale and hearty and capable of serious work to say the age of 80, it's a good bet that our retirement age would be raised to 80, and we'd regard the extra 50 million people in the work force as an important part of our economic strength. (Granted, 80 year olds aren't as open to new ideas and as flexible to job shifts as 20 year olds, but their extra experience ought to have some value too.)

(2) We're in an awkward situation where modern medicine can prolong life but not prevent aging. Which leads to the sort of issues no one really wants to address -- the cost of keeping people alive with Alzheimer's and serious disabililties who simply aren't part of the "living" community. It's unclear to what extent improved care and near term medical advances will change this situation. Should the US as a society try to solve this with better medicines? Or should we follow the Japanese example and be working on robot attendents to provide care for the elderly?

(3) At some point, we might hope to know about drug interactions and human genetics that physicicans can diagnose illnesses and prescribe treatment regimes for the sick on an individual-by-individual basis. We might even have tailor-made medicines, and we might even have this be so routinized as to be "cheap" (well, cheaper than the costs of being sick). Alas, we're probably a century away from that point, although we should see glimmerings of it in 50 years. That's my guess, anyhow.

(4). There's probably a huge stock of cheap game-changing medical innovations that haven't been realized yet, but will slip into place with little notice. The Heimlich manuever for treating people with choking, for example, or training people how to deal with drowing victims, or the emergence of paramedics as a profession, or the provision of electroshock gear for treating heart attack victims in building lobbies, or auto seat belts, or spreading disapproval of smoking and drunk driving and wife-beating... Most of these we don't consider medical costs, but they affect health, and they seem to do so in ways which are acceptable to liberals and conservatives.

1) I think all your points are well-taken. But as someone who tries to figure out what makes the Obama administration tick, this was an ah-ha moment for me.

2-1) Agreed. The cut-off ages for Medicare are "attached" to those of social security. When that was instituted, the life expectancy of a 65 year old just starting to collect was 2 years. If we had kept up with that target, the retirement age would be around 80.

2-2) Agreed. We have certainly dug a hole for ourselves. For me, the important recognition is that we need to address this first ... not the melange of issues that was in Obamacare.

2-3) Who cares? That tailoring of medications is a secondary concern to the primary one that they make the financial problem worse.

2-4) Again, who cares? It's all good ... but these are secondary or tertiary issues.

(1) I've never seen Obama and Biden as saints or angels given us by God to lead us into Paradise. My thought back in 2008 was that Obama was an ordinary Chicago Democrat who would give us a wishy-washly Big City sort of liberal administration, and that's basically been borne out. I voted for the guy then and in 2012 because the Republican teams seemed worse -- and because my considered judgement is that the USA actually needs a dose of wishy-washy liberalism-- but I've never burned candles in his honor. So it goes.

(2) My points 3 and 4 on the second post were that personalized medicines and some sorts of health-related social tweaking might actually reduce health care spending or related spending over time. Think for a moment about the various initiatives to get lead out of the environment, whether in automobile exhausts or indoor paint. Or asbestos removal efforts. Are these REALLY insane-liberal vs sensible-conservative issues?

1) Agreed. I voted for Obama in 2008, but couldn't bring myself to vote for either of them in 2012.

2) I totally agree with this. But, I still think these are secondary ... at best. And, by the way, personalized medicine is another way of saying less elastic demand, which will make the overpricing issues worse.

Genesis

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